Logistical Efficiency

As mentioned earlier, one important principle for Ikea has always been prioritizing logistical efficiency in the stores. There are three elements to this.

• Minimize the movement of the goods within the store. Stores are planned and the packaging of products configured so that they can be brought directly to the sales space and sold without the need for remerchandising.

• Contrary to conventional wisdom, stock is seen as an asset, and product availability to the customer is always prioritized over stock rationalization.

• There is a belief that maximizing direct delivery from the suppliers with full utilization of the transport carriers makes economic sense.

This logic leads to greater capital expenditures in both stock and bigger stores, but the company’s thinking is that there is a bigger upside in additional sales and customer satisfaction by having the goods in stock combined with higher productivity (sold goods/ worked hour) through rational goods handling and lower distribution costs, made possible with bigger stores.